Editorial: New rate hike is a fair compromise

Monday

Sep 29, 2008 at 12:01 AMSep 29, 2008 at 11:24 PM

In case downstaters missed the news amid a crazy week on Wall Street, last week utility regulators approved a $162 million electricity and natural gas rate hike for Ameren Illinois. Customers of AmerenCILCO, AmerenCIPS and AmerenIP will notice very soon; the changes OK’d by the Illinois Commerce Commission (ICC) take effect Wednesday.

In case downstaters missed the news amid a crazy week on Wall Street, last week utility regulators approved a $162 million electricity and natural gas rate hike for Ameren Illinois. Customers of AmerenCILCO, AmerenCIPS and AmerenIP will notice very soon; the changes OK’d by the Illinois Commerce Commission (ICC) take effect Wednesday.

But don’t panic. This is not a repeat of winter 2007, when electricity bills doubled and even tripled after a decade-long, state-mandated rate freeze expired, and Illinoisans practically clamored for the heads of power company execs.

This is a much smaller action, an increase in the delivery rate — as its name suggests, what the utility charges for delivering energy to homes — which represents about 30 percent of a customer’s bill. It comes after a yearlong rate case in which, ultimately, neither the utility nor consumer advocates got exactly what they wanted.

As such, we think it’s a fair compromise.

Indeed, Ameren Illinois desired a much larger increase, of $247 million, saying it needed the operating revenue to build and maintain power lines, poles and other equipment. Regulators spent months combing through its request. “We looked at every line item of their budget to see if what they proposed was appropriate,” said ICC spokeswoman Beth Bosch. In a unanimous action, commissioners whacked Ameren Illinois’ desired hike by a third.

It is worth noting that the utility also initially sought approval for a bunch of “riders” that would have allowed it to tack extra charges onto customers’ bills without having to argue them before the ICC. That took some nerve, frankly.

One such, dropped early on, would have let Ameren Illinois charge good customers to recover the debt incurred by negligent customers. Another, which the ICC rejected, would have permitted the company to pass on the costs of capital projects without the state’s green light.

Yet another would have allowed Ameren Illinois to collect a constant level of delivery service revenue for natural gas, regardless of whether consumers used less gas. Bosch said the ICC modified that one, instead allowing a portion of revenue to be collected through the “customer charge.”

State regulators acted properly in scrutinizing these unfair riders. “This is a victory that consumer advocates can claim,” said Gerardo Cardenas of AARP, which closely followed the rate case.

Meanwhile, AARP and fellow consumer watchdog Citizens Utility Board didn’t get what they really wanted, which was rejection of this rate hike and a separate, $270 million hike for Chicagoland power company ComEd. Cardenas said these come at a time when prices everywhere are rising — for gas, food, housing and prescription drugs — and that “the last thing people needed was higher utility bills.”

We hear that, but power distributors are dealing with inflationary costs, as well. If they can’t recover those costs, potentially the safety and reliability of the system is compromised. That’s no good, either.

Also, we can’t help but note that while AmerenIP customers will shoulder the largest rate increases, and AmerenCIPS users will see moderate hikes, regulators say AmerenCILCO customers will actually enjoy decreases in electricity charges year-round, and in natural gas charges during winter. Call it karma: When the electricity rate freeze expired last year, CILCO’s territory absorbed the largest spike in the state.

We’ll welcome any break we can get. And we hope it’s a long, long time before utilities go asking the state for more rate hikes.

Peoria Journal Star

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